Author Archives: Elizabeth Loftus

Innovative or Ineffective?: Performance-Based Lending as an Anticorruption Tool

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The Sustainable Development Goals’ (SDGs) new focus on fighting corruption and building institutions has generated quite a stir (including on this blog – see here, here, here, and here). But the Millennium Challenge Corporation (MCC) – a U.S. agency responsible for disbursement of assistance geared toward international development targets – has long been acting against corruption through its effort to achieve the SDG precursors, the Millennium Development Goals (MDGs). Institution-building does not appear among the substantive aims of the eight MDGs. Rather, the MCC made anticorruption central to its work by introducing corruption indices into its process for competitive selection of aid recipients. In brief, the MCC Board of Directors chooses aid-eligible countries by evaluating and scoring candidates countries’ “policy performance” on a number of measures. Crucially, in order to qualify for aid, countries must score above average for their income group on the Worldwide Governance Indicators (WGI) “Control of Corruption” score. The indicator is therefore known as the “hard hurdle.” The Board also assesses corruption trends in its analysis of a country’s ability to reduce poverty and generate economic growth, which, with policy performance, comprises the overall evaluation.

This strategy is known as performance-based lending, and the MCC has employed it to award over $10 billion in grants to nearly 40 countries over the past 12 years. Is the MCC approach a good one? Many critics say no. I say yes. Although it is a strategy that is still evolving, performance-based lending—including the corruption control “hard hurdle”—is not only innovative and effective, but important.

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Due Process and its Discontents: Nigeria’s Case Against Sambo Dasuki Encounters an Unwelcome (but Necessary) Hurdle

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Just over a year ago, Nigerian President Muhammadu Buhari took office. He had run on a platform of anticorruption and military reform and, while I wanted to be hopeful, I expressed measured skepticism that he would be able to make substantial headway on either issue. For all he has received his fair share of criticism over the past year, President Buhari has made considerable efforts to tackle corruption, including graft in the military. In addition to advancing somewhat controversial legal reforms aimed at whistleblower protection and anti-money laundering, among other things, the Buhari administration has stepped up prosecution of high-level officials for corruption-related crimes.

The most prominent case is that of Colonel Mohammed Sambo Dasuki, who served as former President Goodluck Jonathan’s National Security Adviser from 2012 to 2015. Following an investigation into arms procurement under the Jonathan administration, authorities arrested Dasuki in late 2015 and indicted him on numerous counts of fraud and money laundering. The initial investigation by the Economic and Financial Crimes Commission (EFCC), one of Nigeria’s anticorruption units, uncovered evidence that Dasuki had orchestrated a fraudulent $2 billion arms deal and had engaged in other criminally corrupt activity. The charging documents accuse Dasuki of funneling state funds to politicians of the former ruling party, real estate developers, consultants, and religious leaders. The money had been intended to purchase helicopters and military planes for the fight against Boko Haram, the terrorist group responsible for the death of thousands and the displacement of millions in northern Nigeria. The purported criminal conduct involved high-profile co-conspirators, including former Minister of Finance Bashir Yuguda and former governor of Sokoto State Attahiru Dalhatu Bafarawa. If the alleged facts are true, Dasuki and his accomplices are guilty of heinous crimes.

Given the severity – and plausibility – of the purported misconduct, I was not shocked to see that the case had reached the ECOWAS Court of Justice – a regional body with jurisdiction over human rights abuses committed by Member States. I was shocked to see that Dasuki was the complainant, and that the Court of Justice had issued a preliminary ruling in his favor. Upon taking a step back, though, I realized that the Court of Justice ruling is not outrageous; in fact, it has sent a critically important message to the Nigerian government that respecting the rule of law is just as important as convicting corrupt officials.

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Laissez-nous Faire: France is Forgoing an Opportunity to Fight Corruption, But Maybe It is the Wrong One

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In an ongoing exchange on this blog, Susan Hawley and Matthew Stephenson have debated the desirability and practicality of global standards for the settlement of foreign bribery cases (see here, here, here, and here). A key country at issue in this discussion is France, which has bucked the trend among its peer nations – including the U.S., the U.K., the Netherlands, Switzerland, and Germany – toward resolving foreign corruption cases through negotiated resolution. In fact, France has increasingly come under fire from organizations like the OECD, the EU, and Transparency International for its failure to hold corrupt companies accountable at all – over the past 16 years, the French government has not secured a single corporate conviction for overseas bribery. As Sarah convincingly argued on this blog, the reason is not that French companies are less corrupt or that French authorities are less capable, but rather that procedural barriers prevent productive investigation and resolution of cases. Primarily, the French civil law system lacks a settlement mechanism by which companies can negotiate lighter penalties in exchange for fines and cooperation. France is thus an important target for legal and policy reform affecting out-of-court settlement procedures.

Until very recently, the French government was poised to undertake such reform. Late last year, French Minister of Finance Michel Sapin developed legislation aimed at strengthening the fight against corruption. The draft version of Loi Sapin II, as it is known, contained provisions that put in place a new national anticorruption agency with investigative and oversight powers, enhanced compliance requirements, greater protections for whistleblowers, and stricter disclosure protocols for public officials. The most powerful and controversial element of Loi Sapin II, however, was the “convention de compensation d’intérêt public” (CCIP). Also known as a transaction pénale, the CCIP is a settlement mechanism modeled on the American deferred prosecution agreement (DPA). This tool would have allowed agreements between companies and the government, by which an accused corporation would institute compliance measures and pay fines (capped at 30% of average revenue over the preceding three years) in lieu of facing prosecution.

Just before the text of the law was formally presented, however, the Conseil d’État – the government body that must review draft legislation sponsored by non-parliamentarians before it can be introduced in Parliament – issued a negative opinion on the CCIP. When the text was submitted to the government on March 30, it did not include the transaction pénale. Procedurally speaking, the provision isn’t yet dead – it may still be reintroduced by members of Parliament. Nevertheless, the opinion of the Conseil d’État says a lot about France’s approach to anticorruption, trends in global enforcement, and the prospects for universal settlement standards in a world where legal cultures differ substantially.

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Does Immunity Mean Impunity?: Understanding Obstacles in the Prosecution of U.N. Corruption

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Corruption has yet again publicly surfaced as a significant problem at the United Nations. The current bribery scandal implicates John Ashe, the U.N. ambassador from Antigua and Barbuda and the former President of the General Assembly, along with several others. Ashe stands accused of accepting $1.3 million in bribes from Chinese developers in exchange for promoting real estate projects. Among the others who have come under scrutiny is Francis Lorenzo, the Dominican Republic’s deputy ambassador to the U.N., who allegedly accepted and paid bribes as a part of a scheme to influence decisions related to the development of a multi-billion dollar U.N. conference center in Macau.

As both Sarah and Matthew have previously discussed, the U.N. has not done an admirable job of policing itself. But now the organization may be getting help from the U.S. Attorney’s Office for the Southern District of New York. In October 2015, the FBI arrested Ashe and Lorenzo on charges of tax evasion and bribery, respectively. But the prosecution of officials of an international organization poses uncommon challenges. U.N. diplomats can claim certain immunity against suit in American courts, and both Ashe and Lorenzo plan to assert such immunity as a complete defense. U.S. Attorney Preet Bharara feels confident that he will be able to defeat these immunity claims, and he has further implied that he will be able to do so in future cases.

Is Bharara’s confidence well-founded? Any assessment of how American prosecutors (or other national prosecutions) may fight corruption at the U.N. requires delving into the complex legal doctrines on diplomatic immunities. This post aims to offer a brief primer on the key legal concepts and doctrines, and how they might apply in the Ashe and Lorenzo cases. Continue reading →

Anticorruption Truth Commissions? Lessons to be Learned from Human Rights and Transitional Justice

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A few months back, Anusha made the case for why “freedom from corruption” should not be regarded as a human right. She pointed out a number of legitimate distinctions between corruption and other human rights violations, as well as practical problems with framing corruption in this way. But there are other ways in which corruption does resemble a human rights violation: namely, in the harm it causes. Like widespread human rights abuses, the harm stemming from corruption is often diffuse and difficult to quantify, often with many victims (not always identifiable) and numerous perpetrators. For practical and functional purposes, in the case of systemic corruption–as in the case of regimes with pervasive human rights abuses–it may not be possible to make reparations to all of the victims or to hold all of the offenders to account.

Thus, even if it is impossible – or undesirable – to fully integrate the anticorruption and human rights agendas, it is still worth considering what lessons we can draw from the human rights regime and incorporate into the anticorruption field. Consider, in particular, one mechanism designed to deal with instances of mass atrocities and systematic human rights violations: the truth commission. In the human rights and transitional justice context, truth commissions are temporary bodies responsible for investigating and publicizing past rights abuses committed by public and private actors. As a general matter, truth commissions prioritize gathering information and establishing an accurate record over punitive sanctions. Truth commissions also often involve a quasi-judicial element – which frequently entails granting amnesty to certain actors or referring cases to prosecutorial entities – and emphasize “bottom-up” victim participation. Certain elements of the truth commission model may be instructive in designing justice measures for corruption crimes.

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EU Anticorruption Policy and Due Process: An Inconsistent Approach?

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Advocates have been pushing for a European Union version of the Magnitsky Act for a number of years now (see, for example, here and here). Such legislation for targeted sanctions (including visa restrictions and asset freezes) against alleged human rights abusers in Russia would be much more powerful in Europe than it is in the U.S. Yet, despite support from some member states, proposals in the European Parliament have met with opposition. Much of the concern is, doubtless, geopolitical. Dependent upon Russia for oil, the EU is likely loath to instigate retaliation from its imposing neighbor (as the Magnitsky Act has). Yet, as a previous post on this blog has argued, the EU also objects to the US approach on more principled grounds: namely, the Magnitsky Act runs afoul of due process and presumption of innocence principles in the EU Charter on Fundamental Rights and the European Convention on Human Rights. However, while the EU is busy debating what the right hand should do with respect to targeted sanctions, it may have ignored the left hand’s effect on due process in anticorruption enforcement, as in reflected other areas of EU efforts against graft.

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The U.S. Indictments of FIFA’s Corrupt Officials Are Legally, Morally, and Politically Justified

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For avid soccer fans and students of anticorruption, last week’s announcement that top FIFA officials had been indicted by U.S. authorities was not all that shocking. Commentators on this blog have been documenting FIFA’s collision course with the criminal justice system for some time now (see here, here, and here). But as American law comes to bear on the world’s most powerful sporting organization, it has caught the attention of millions. The reaction of many has been a wry “How fitting? The Americans going after soccer, and relying on tenuous legal reasoning to boot.”

Harvard Law School Professor Noah Feldman articulated the critique in a recent Bloomberg article, entitled “The U.S. is Treating FIFA Like the Mafia.” Feldman’s overarching point is that, while FIFA may be a problematic organization, the U.S. enforcement action reflects dubious politics more than genuine legal interest. Professor Feldman raises three main objections to the DOJ’s indictments–focused, respectively, on the law, policy, and politics of the indictments. First, with respect to the law, he casts doubt on the legal basis for prosecuting FIFA officials under the U.S. Racketeering Influenced and Corrupt Organizations Act (RICO), given that the alleged offenses occurred on foreign soil, and suggests more generally that the entire case is absurd because RICO is designed to go after organized criminal enterprises, not sporting organizations like FIFA (or groups within FIFA). Second, Professor Feldman contends that, as a matter of policy, even if the U.S. has a sound legal basis for prosecution, exercising its jurisdiction in this case is inappropriate due to the lack of a strong U.S. interest in misconduct within FIFA, given that the U.S. cares much less about soccer than most other countries do. Third, and related to the preceding point, Professor Feldman suggests that the political fallout from the indictments is likely to be damaging to the U.S. He argues that the underlying premise of the RICO action–that FIFA (or a group within FIFA) is a criminal enterprise–is “incendiary,” and will be viewed as an imperialistic power play by the United States against soccer’s true fan-base (a.k.a, the rest of the world).

In my view, Professor Feldman is wrong on the law, shortsighted about the scope of U.S. interests in the alleged criminal conduct, and overly pessimistic about the political repercussions of the U.S. action. If the facts alleged can be proven, the U.S. is legally, morally, and politically justified in treating the indicted FIFA officials as RICO offenders.

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The FCPA Under Attorney General Loretta Lynch

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After the third longest wait for Senate confirmation in history, Loretta Lynch finally received approval to be the next Attorney General of the United States on April 23. When she assumes her position as the head of the U.S. Department of Justice, complex challenges related to cybersecurity and community-police relations will likely be at the top of her list of undertakings. But Lynch has also vowed to make continuing the DOJ’s commitment to fighting global corruption “a top priority.”

Indeed, Lynch has substantial FCPA experience – more than any previous Attorney General (unsurprising, given that it was her two predecessors, Eric Holder and John Ashcroft, who largely oversaw the ascendance of the FCPA regime). As the U.S. Attorney for the Eastern District of New York, Lynch collaborated with the DOJ’s Fraud Section to secure the Ralph Lauren and Comverse non-prosecution agreements. She as worked on the other side as well. As a partner at Hogan & Hartson, she conducted internal investigations, advised clients that had run afoul of the FCPA, and conducted continuing legal education classes on anticorruption. As lawyers, scholars, and business leaders debate the need for FCPA reform (see, for example, here and here), what might the new Attorney General mean for the enforcement regime?

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Buyer Beware: What Does President-Elect Muhammadu Buhari’s Anticorruption Record Actually Mean for Nigeria?

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In my last post, I tied the rampant corruption in the Nigerian armed forces to the military’s historically central role in the country’s politics. But on March 28 and 29, Nigerians went to the polls and voted against the status quo and corruption in the military. In doing so, they ousted President Goodluck Jonathan in favor of President-Elect Muhammadu Buhari, the candidate from the All Progressives Congress (APC) party. A number of factors – the threat of Boko Haram, plummeting oil prices, out-of-control corruption and, important in light of my last post, a fissure between current and retired army officers – aligned to bring about Nigeria’s first ruling party transition since the country’s adoption of multiparty democracy in 1999. It is a truly momentous time in the country’s history and many — from President Jonathan, to the Independent National Electoral Commission, to courageous voters in conflict areas — deserve recognition.

Although many see the recent election result as a blow Nigeria’s old guard, President-Elect Buhari is from an even older guard. A former major general in the Nigerian military, he acted as head of state from 1983 to 1985 after seizing power in a coup against the democratically elected leader, Shehu Shagari; Buhari himself was ousted by coup shortly thereafter. His track record during his brief prior presidency leaves one feeling decidedly ambivalent. He waged an infamous “War Against Indiscipline,” which aimed to instill order and integrity through public whippings, summary arrests and convictions, wildly disproportionate prison sentences, and humiliating penalties for minor infractions. He is also remembered for issuing draconian decrees curtailing press freedoms.

Yet Buhari has eschewed his authoritarian past, explaining “now I want to operate as a partisan politician in a multiparty setup. It’s a fundamental difference.” There is some evidence that this is more than just talk. He stood for election in the last three cycles and, despite accusations of incitement to violence, he accepted the unfavorable results each time. Additionally, President Buhari’s progressive party, the APC, will likely influence his agenda, as will Vice President-Elect, Yemi Osinbajo, the former Attorney General of Lagos State who is a staunch advocate for justice sector reform. It will also help that Nigeria has a mostly free press, robust civic engagement, and the attention of the world. A more positive aspect of Buhari’s record from his last stint as head of state is his regime’s reputation for honesty, dedication to the fight against corruption, and action against offending officials. In fact, the 1983 coup came about under conditions quite similar to those animating Buhari’s surge today – flagrant financial mismanagement by Shagari and depressed oil prices. Buhari’s short-lived regime imprisoned roughly 500 elite politicians and businessmen on corruption charges. Partly because of this legacy, there are now high expectations — perhaps unrealistically high — that President-Elect Buhari will be able to act effectively against corruption in Nigeria. After all, his campaign platform emphasized anticorruption (along with pledges to fight Boko Haram more effectively), and this theme had widespread appeal among voters. Given President-Elect Buhari’s record from his previous stint as Nigeria’s president in the early 1980s, many believe that he has the “political will” to fight corruption that President Jonathan sorely lacked.

Yet even if Buhari’s intentions are pure, and his will strong, there are a number of reasons not to get too excited too soon about what Buhari will be able to accomplish on this front. Indeed, the progress that Nigeria has made toward genuine multiparty democracy, exemplified by Buhari’s election, may — perhaps ironically or perversely — make it more difficult for him to pursue an anticorruption agenda now than it was the last time around.

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Who Calls the Shots?: Boko Haram and the Legacy of Military Leadership in Nigeria

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When Boko Haram operatives attacked a Nigerian military outpost near the village where I lived in northern Cameroon in 2011, locals condemned the assault. But they admitted that something had to be done about soldiers who, they said, regularly apprehended people and held them for ransom. Boko Haram’s tenor and tactics have grown increasingly radical and destructive since, but the early perceptions of the group highlight, in part, the relationship between corruption and instability. In that case, alleged military corruption directly contributed to violent conflict. Indeed, many analysts have drawn connections between government corruption and the rise of Boko Haram (see here, here, and here).

Transparency International has weighed in on the situation, as well, detailing how corruption has both continued to fuel instability and hampered the response to Boko Haram attacks. TI calls on the Nigerian government to “speak out against corruption and … invite civil society organizations to take part in developing an anti-corruption strategy.” Each course requires significant political will. Nigerian leaders’ historic relationship with the military may do a lot to explain why the requisite political commitment has failed to materialize within past administrations. Continue reading →